About Accounts Receivable And Accounts Receivable Management

Accounts receivable is one of a sequence of financial accounting transactions dealing

with the billing of a customer for goods and services he/she has considered. In most business entities this is usually done by generating a statement and mailing or automatically delivering it to the customer, who in turn must pay it within a recognized time-frame called "creditor expense terms."

Account receivable means money which is billed to a company by a customer for products and services provided on credit. This is treated as an existing asset on a balance sheet. A detailed sale is normally only treated as an account receivable after the customer is sent an invoice.

While booking a receivable is proficient by a plain financial accounting transaction, the procedure of maintaining and collecting payments on the accounts receivable subsidiary account balances can be a full time proposal. Depending on the industry in practice, accounts receivable payments can be acknowledged up to 10 - 15 days subsequent to the due date has been reached.

Account receivables are classified as existing assets assuming that they are due within one year. To documentation a journal entry for a sale on account, one must debit a receivable and credit a revenue account. When the customer pays off their accounts, one debits cash and credits the receivable in the journal entry. The ending balance on the trial balance sheet for accounts receivable is always debit.

In today's credit environment outsourcing accounts receivable management has become an important business tool. How companies handle accounts receivable differs, but accounts receivable processes commonly allow you do three things:

Record your daily sales and receipts.

Generate customer invoices and monthly statements.

Track customers' current and past-due balances.

Related accounting issues include recognizing accounts receivable, valuing accounts receivable, and disposing of accounts receivable. Accounts receivable departments use the sales ledger. Other types of accounting transactions include accounts payable, payroll, and trial balance.

by: Bookkeeping Services India

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